Technology bulls lost ground on Wednesday as they finally succumbed to the weakness that has plagued the broader averages this week. The Nasdaq 100 closed at 16,736, a decline of 0.6%, states Jon Markman, editor of Strategic Advantage.
The weakness for the tech-heavy NDX could have been much worse. The benchmark began the session at 16,700 and traded down to 16,560 before a late afternoon rally trimmed losses. Shares of many big capitalization tech firms, like Meta Platforms (META) and Advanced Micro Devices, Inc. (AMD) reversed large early losses and finished higher. Moreover, the bulk of the selling was concentrated in stock groups that have performed best during the past several months.
Cybersecurity issues such as CrowdStrike (CRWD) and Zscaler (ZS) were among the worst-performing stocks in the NDX, losing 3.5% and 3.0% respectively. The bottom line is that Wednesday was not a terrible session for technology bulls. They held critical support levels, and the biggest shares were either well bid, or they were undergoing consolidation of recent gains. Some of this is a continuation of the capital inflow story at professional money management firms.
Investors are buying the strategies that performed best in 2023, namely big tech. This is keeping a steady bid under all of the biggest tech issues. And except for Apple (AAPL), investment strategists have been extremely reluctant to make disparaging comments ahead of upcoming earnings reports. The first important announcement will come on January 30 when Microsoft (MSFT) is set to release second-quarter financials for fiscal 2024. Bulls should have a relatively free ride until that time. There is support for the NDX at 16,620, the rising 20-day moving average. A rally beyond 17,000 should lead to frantic short covering and a parabolic advance.
Double Trouble: Our timing model is now bullish. Members added the ProShares Ultra QQQ (QLD) on January 17 at $73.90. The QLD closed on Wednesday at $74.86, up 1.3% from the entry level.
Now place a stop loss order at $63.20. The target for this position is $88.30.
